20th century AD

Railway Age, Dec, 1999 by Frank N. Wilner

Railroads recognized that nationalization loomed if they did not achieve increased traffic density and other cost savings through merger. So they sat down with their unions and crafted the Washington Job Protection Agreement, which provided temporary income protection in exchange for a scrapping of mandatory job protection. It remains in force today.

Attempts by government to design railroad mergers ended formally with passage of the Transportation Act of 1940. Public policy continued to encourage rail mergers, but limited government's involvement to regulatory approval and oversight.

The Great Depression was devastating in economic terms. Yet much like a forest fire it cleared smothering underbrush and less productive old growth so that progressive ideas might take hold and flourish. More than a year before the advent of Social Security and unemployment compensation became available to workers generally, Congress moved toward providing these benefits to rail workers: Railroad Retirement provided cash benefits to encourage older workers to retire and make way for younger workers in an economy offering few jobs.

WARTIME PROSPERITY

World War II put the U.S. back to work and created unprecedented demand for rail service. Unlike in World War I, railroads were better prepared for the task. The endemic car shortages and yard congestion of World War I were mostly avoided and railroads posted an enviable 67.7% operating ratio during the war years. The weight of rail had been increased, freight cars had greater carrying capacity, automatic block signals were becoming common, centralized traffic control was in place, and steam engines, requiring labor-intensive maintenance, were being replaced by diesels. By the mid-1950s dieselization was virtually complete.

Railroads carried 50% more freight during World War II than World War I and nearly 100% more passenger traffic. Rationing of fuel and rubber limited truck transportation, so some 90% of military equipment and more than 95% of military troops moved by rail during World War II.

The rail industry was not nationalized during World War II, although labor disruptions did cause a 27-day government takeover during the winter of 1943-1944. There was, however, substantial federal coordination of rail service through the Office of Defense Coordination, which worked closely with the AAR and shipper advisory boards.

POST-WAR DECLINE

Railroad profits and employment soared during World War II, but slow and steady decline followed it. Returning soldiers began families, moved to the suburbs, and created a formidable constituency for substantially increased highway subsidies that benefited truckers and coaxed passengers from trains to automobiles. Airmail, air traffic control, and airport construction subsidies spawned growth of the airline industry. Growing inland waterway subsidies permitted barge operators to make inroads in hauling bulk commodities. By the late 1950s a jet fleet was in the air and construction of the Interstate Highway system had begun. Disparities in economic regulation prevented railroads from competing with barge and truck operators on the basis of price and service offerings.